Budget-plan beer tax surprises lawmakers
Posted on Friday, November 17, 2006
Lawmakers studying the Public School Fund budget proposal Thursday scratched their heads when they saw that Gov. Mike Huckabee’s recommendation includes keeping the additional sales tax on beer.
The tax is to end June 30, 2007, but the executive recommendation has it continuing at least through fiscal 2009.
Sen. Terry Smith, D-Hot Springs, asked if that was a mistake.
“The governor is supporting continuing the beer tax,” answered Mike Stormes, the state budget director.
The tax brings in $ 6. 9 million a year for preschool programs. It was a part of the $ 2 billionplus Public School Fund budget submitted at the Arkansas Legislative Council-Joint Budget Committee budget hearing.
Alice Stewart, a spokesman for Huckabee, later wouldn’t say why the governor supports continuing the tax.
In 2001, legislators passed the tax during a state revenue crunch to prevent cuts in preschool programs. Huckabee opposed it, and it became law without his signature.
The Legislature renewed it in 2003 and again in 2005 to keep the programs intact. But most legislators said they assumed it would go away now that the state treasury is bulging. An $ 843 million surplus is expected through the end of this fiscal year.
Sen. Percy Malone, DArkadelphia, described the beer tax as a “temporary tax” and said legislators should “honor our word” and eliminate it.
“There’s no way in the world the members of the Revenue and Tax Committee are going to extend this tax... under no circumstance,” said Sen. Bobby Glover, D-Carlisle.
Sen. Paul Miller, DMelbourne, noted that it really didn’t matter what Huckabee recommended because the forthcoming recommendations of the governor-elect — Mike Beebe — will be what the Legislature considers. Huckabee leaves office Jan. 9.
The state Department of Education didn’t include the beer tax in its budget recommendation. Education Commissioner Ken James said he didn’t know Huckabee’s rationale for keeping the beer tax. But James said that without the revenue from the beer tax, money for those preschool programs would have to come out of the Public School Fund’s overall budget, which could affect other programs.
The beer tax is an extra 3 percent sales tax. It was passed in 2001 after preschool advocates flooded the Capitol to oppose planned cuts put forth by the Huckabee administration after revenue shortfalls. Huckabee let the tax bill become law without his signature, a tactic he has used on bills that he says he opposes but does not veto. At the time he said he did so because he would have preferred that the Legislature fund the preschool programs with money lawmakers wanted to use for local projects.
Huckabee is considering a run for the Republican nomination for president in 2008 and has touted himself as an opponent of new taxes. In his time as governor, he has opposed some tax increases and supported others while also supporting some tax cuts.
The legislative session starts Jan. 8. In Arkansas, the Legislature meets every two years in regular session and enacts the state budget two years at a time.
The proposed Public School Fund budget would increase about $ 300 million from fiscal 2006, which ended June 30, to fiscal 2009, which will end on June 30, 2009. A breakdown of the budget shows: 2006: $ 2. 34 billion. 2007: $ 2. 44 billion. 2008: Department recommendation, $ 2. 598 billion. Governor’s recommendation, $ 2. 587 billion. 2009: Department recommendation, $ 2. 674 billion. Governor’s recommendation, $ 2. 654 billion.
James told legislators that one difference between his and Huckabee’s recommendations is the amount increased for base per-student funding for school districts. That base funding is the amount the state makes sure every district has from state and local sources as a minimum for district operations.
James said the department factored in a 3. 5 percent Consumer Price Index increase while the governor used an increase of between 3. 3 percent and 3. 4 percent.
Other legislative committees studying how much money is needed to provide an adequate education haven’t finalized estimates for per-student funding, James said.
In 2002, the Arkansas Supreme Court ruled that public-school funding was unconstitutionally inadequate and inequitable. The Legislature passed tax increases in 2004 that Huckabee didn’t sign to increase education funding. That was one of the state’s most noted responses to the court decision.
Consultants hired by the state reported that publicschool spending has increased significantly since then.
They reported this summer that per-pupil expenditures statewide were $ 6, 672 in 2003-04 and $ 7, 489 in 2004-05. The report said total education revenue — from federal, state and local sources — in Arkansas has increased from $ 2. 2 billion in 1995-96 to $ 4 billion in 2004-05.
Spending figures for 2005-06 aren’t available from the department, a spokesman for the department said Thursday.
Last December the Supreme Court again found state financing of schools lacking and ordered a remedy in place by Dec. 1, 2006. More money was added during a special session in April. School districts that sued the state over school funding haven’t filed additional pleadings with the court.
Current state per-student funding is $ 5, 620 a student plus $ 42 a student for additional contributions toward teacher retirement.
The department recommends a $ 5, 860 per-student amount for fiscal 2008 and $ 6, 065 for 2009.
Legislators must also figure out how to compute funding for districts with high concentrations of low-income students. Legislators have talked about creating a sliding scale to make the funds distribution more fair than the current formula in which funding can double based on the presence of one additional low-income student. Funding for the lowincome programs for this fiscal year is $ 144. 7 million.
The department is also recommending a big increase for distance-learning programs, which would help provide classes for rural schools lacking teachers.
Funding would increase from the current $ 3. 5 million a year to $ 6. 5 million a year for 2008 and 2009 under the department’s recommendation. Huckabee has recommended that funding stay the same.
The committee approved neither the governor’s nor the department’s funding recommendations and referred the Public School Fund budget request to a subcommittee for further discussion.
Beebe spokesman Zac Wright said some of Beebe’s budget proposals will be ready before he takes office and some will need further development.
During the campaign, Beebe called for increased preschool funding and creating a “traveling teacher” program to help small rural schools teach the staterequired courses.
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